These Are The 5 Best Stocks To Buy And Watch Now
   
Licensing
MICHAEL LARKIN04:17 PM ET 11/21/2021
Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. So what are the best stocks to buy now or put on a watchlist? Google-parent Alphabet ( GOOGL), Airbnb ( ABNB) ServiceNow ( NOW), Dick's Sporting Goods ( DKS) and Eli Lilly ( LLY) are prime candidates.
the nasdaq-100 up over half a percent.
Volume 0%
Since the coronavirus bear market, stocks rebounded powerfully. The strong action reflects rising confidence that the economy will eventually recover from the coronavirus.
But Covid remains a concern, even as vaccinations reach more and more Americans.
The major indexes have been sending mixed signals amid ongoing inflationary worries. Increasing clarity on the Federal Reserve's approach to tapering bond purchases has been a help, but uncertainty over who will be leading the central bank is weighing.
Best Stocks To Buy: The Crucial IngredientsRemember, there are thousands of stocks trading on the NYSE and Nasdaq. But you want to find the very best stocks right now to generate massive gains.
The CAN SLIM system offers clear guidelines on what you should be looking for. Invest in stocks with recent quarterly and annual earnings growth of at least 25%. Look for companies that have new, game-changing products and services. Also consider not-yet-profitable companies, often recent IPOs, that are generating tremendous revenue growth.
IBD's CAN SLIM Investing System has a proven track record of significantly outperforming the S&P 500. Outdoing this industry benchmark is key to generating exceptional returns over the long term.
In addition, keep an eye on supply and demand for the stock itself, focus on leading stocks in top industry groups, and aim for stocks with strong institutional support.
Once you have found a stock that fits the criteria, it is then time to turn to stock charts to plot a good entry point. You should wait for a stock to form a base, and then buy once it reaches a buy point, ideally in heavy volume. In many cases, a stock reaches a proper buy point when it breaks above the original high on the left side of the base. More information on what a base is, and how charts can be used to win big on the stock market, can be found here.
Don't Forget The M When Buying StocksA key part of the CAN SLIM formula is the M, which stands for market. Most stocks, even the very best, follow the market direction. Invest when the stock market is in a confirmed uptrend and move to cash when the stock market goes into a correction.
The stock market looks to have cleared a rough patch. However new coronavirus lockdowns in Europe are concerning.
The market is now back in an uptrend after clearing stubborn resistance. However the rally is becoming increasingly split, with strength among the massive tech names hiding weakness in other areas.
This Nasdaq closed the week at a record high. The S&P 500 edged high, and remains well clear of the key 50-day moving average. However the Dow Jones Industrial Average fell back 1.4% over the last week. It remains clear of its 50-day line despite a three session losing streak.
The market is now back in a confirmed uptrend. Now is a good time to be buying fundamentally strong stocks breaking out of sound chart patterns. The stocks featured below are potential candidates.
Remember, things can quickly change when it comes to the stock market. Make sure you keep a close eye on the market trend page here.
Best Stocks To Buy Or WatchGoogleAirbnbServiceNowDick's Sporting GoodsEli LillyNow let's look at Google stock, Airbnb stock, ServiceNow stock, Dick's Sporting Goods stock and Eli Lilly stock in more detail. An important consideration is that these stocks all boast impressive relative strength.
Check out IBD Stock Lists and other IBD content to find dozens more of the best stocks to buy or watch.
Google StockGoogle parent Alphabet is in a buy zone after breaking out of a flat base following strong earnings. The ideal buy point here is 2,925.18, according to MarketSmith analysis. It is actionable as high as 3,071.44.
It is also offering up a three-weeks tight entry of 3,012.40. This is usually used as an opportunity to add to existing shares, but investors could start a position here because it's so close to the prior base.
The relative strength line is just below record highs. It has been moving sideways as it consolidates.
GOOGL stock has a near-perfect IBD Composite Rating of 98. That puts it in the top 2% of stocks tracked overall. Earnings outshine stock market performance, with its EPS Rating a very strong 97 out of 99.
Earnings have grown by an average of 123% over the past three quarters. This is almost five times the 25% growth sought by CAN SLIM investors.
Analysts see strong growth ahead, with Google earnings per share expected to explode 103% in 2021, and then growing by a further 5% in 2022.
The tech giant has a Relative Strength Rating of 87. That means it has outperformed 87% of stocks tracked over the past 12 months in terms of price performance.
Recent performance is strong, with Google stock rising about 70% so far in 2021. This far outstrips the S&P 500's gain of around 25%
Big money has been once again snapping up Alphabet stock of late. This is reflected in its Accumulation/Distribution Rating of B-, which reflects moderate buying over the past 13 weeks.
On the other hand, Alphabet in April announced a new $50 billion GOOGL stock buyback. On its June quarter earnings call, Google announced a modification of the share repurchase agreement allowing the company to repurchase either class A or class C shares.
Late on Oct. 26, Alphabet posted Q3 earnings. EPS jumped 71% to $27.99, including gains on equity investments. Gross revenue rose 41% to $65.12 billion in the quarter ended Sept. 30.
Analysts had estimated Google earnings of $23.73 per share on gross revenue of $63.5 billion.
Internet search and other revenue rose 44% to $37.93 billion vs. estimates of $36.41 billion. Google said cloud-computing revenue rose 45% to $4.99 billion vs. estimates of $5.17 billion. Despite the revenue miss, Google cloud cut its operating loss almost in half to $644 million.
YouTube advertising revenue rose 43% to $7.2 billion. Analysts had estimated YouTube ad revenue of $7.42 billion.
While Google has expanded into cloud computing and consumer hardware, digital advertising still makes up the lion's share of revenue. Google announced in early March that it will stop employing web browser-tracking technology for the purpose of selling advertising. Earlier, Google said it would phase out third-party cookies.
Google plans to utilize "contextual" technology that enables advertisers to target aggregated groups of consumers with similar interests, such as travel, sports or fashion.
Market Rally Diverges: What To Do Now
Airbnb Stock IBD Leaderboard stock Airbnb fell hard Friday on negative Covid news from Europe, though it found support at its 21-day line. But this has allowed it to form a cup with handle on its weekly chart after already showing a handle on a daily chart. The ideal buy point here is 212.68, according to MarketSmith analysis.
Airbnb stock gapped higher on Nov. 5 on strong earnings after just moving past a 177.06 buy point from a short flat base within the larger consolidation on Nov. 4. Investors could have used the post-earnings breakaway gap up price of 190 as an entry.
The stock's relative strength line had been beginning to look strong again. It has taken a bit of a hit, but remains remains well clear of recent lows. It is important that this key gauge, which reflects a stock's performance vs. the broader S&P 500, continues to make headway.
Airbnb reported third-quarter results on Nov. 4. Reported adjusted earnings came in at $1.22 per share, up 239%, with revenue up 67% to $2.28 billion. Analysts expected Airbnb to report earnings of 72 cents and revenue of $2.06 billion, according to FactSet.
Overall performance is not ideal as the young company chases growth. But its IBD Composite Rating has been improving mightily of late, rising to 69 out of 99.
Stock market performance is also getting better, with ABNB stock rising just over 34% since the start of the year. It has popped by more than 15% in the past four weeks alone
Big Money is also getting behind the stock. This is important, as the I in CAN SLIM stands for Institutional Sponsorship.
At the moment the stock holds an Accumulation/Distribution Rating of B-. This represents moderate buying among institutions over the past 13 weeks. It boasts two consecutive quarters of increasing fund ownership, with 33% of stock currently being held by funds.
Airbnb's initial public offering plans were thrown into chaos by the coronavirus pandemic. Not only was the U.S. economy hard, but the tourism industry was particularly affected.
Airbnb — along with airlines, hotels and travel booking companies — had a disastrous Q2 in 2020. The firm saw sales plummet 72% from the year-ago period.
Nevertheless, the company launched its IPO in December that raised $3.5 billion. This was way above heightened expectations, making it the largest IPO of the year. Airbnb stock soared by triple digits on its first day of trading.
As Airbnb stock was blasting out of its flat base on earnings on Nov. 5, a number of other travel stocks were performing well. Online travel sites Booking Holdings ( BKNG) and Expedia ( EXPE) broke out on the same day in the wake of their own earnings reports. Hotel stocks looked strong.
However ABNB, BKNG, EXPE and many other travel stocks have now fallen back, with the negative signs on coronavirus affecting recent gains. Austria announced a new lockdown, while Germany refused to rule out implementing one of its own.
ServiceNow StockServiceNow is consolidating near a 681.20 flat-base buy point, recently forming a three-weeks tight pattern that could provide a 707.70 alternate entry, according to MarketSmith chart analysis.
The software stock seemed a bit extended when it broke out in October. But the 50-day and 10-week lines are catching up. These key technical benchmarks are good areas to buy a Long-Term Leader such as NOW stock.
The RS line has rallied from early June lows. It's now just below the October high.
ServiceNow earns an IBD Relative Strength Rating of 84 out of 99. That means it has outperformed 84% of all stocks over the past 12 months in terms of price performance.
2021 performance is not quite so impressive, with the stock up about 23% so far this year.
In addition, ServiceNow shows a solid EPS Rating of 93. Over the past three quarters earnings have grown by an average of 29%.
In all of 2021, Wall Street expects ServiceNow earnings to leap 427%, then slow to a 16% gain in 2022, according to FactSet.
ServiceNow earnings rose 28% in Q3, beating views as sales increased 31%. Subscription revenue also increased 31%.
The Santa Clara, Calif.-based software company helps IT departments track and manage services. Its self-service tech portal gives employees access to workflow tools.
Those products enabled other companies to keep working remotely during the pandemic.
ServiceNow is not just a Long-Term Leader, but is also a member of the prestigious IBD Leaderboard list of leading growth stocks.
Looking For The Next Big Stock Market Winners? Start With These 3 Steps
Dick's Sporting Goods StockDKS stock came within a hair of breaking out of its cup base last week. The official buy point here is 140.95.
It's also possible that Dick's Sporting Goods could go on to form a handle from here, which would offer a fractionally lower entry.
The relative strength line is finding momentum again after a recent period of choppy action. DKS stock it has been very strong over the past 12 months, and DKS stock is up 158% so far this year.
Earnings have also been strong, rivalling the stock's price performance. It currently holds an EPS Rating of 91. Strong all-round performance has netted it a perfect Composite Rating of 99.
Earnings growth has been powerful over the past three quarters. In the most recent quarter EPS popped 58% to $5.08, in the prior quarter it was $3.79 compared to a loss in the prior year, and they popped by 84% in the quarter before that.
One reason to exercise caution is the sporting goods retailer will announce Q3 results before the market opens on Nov. 23.
An approach highlighted by Investor's Business Daily is to use options as a strategy to reduce risk around earnings. It's a way to capitalize on the upside potential of a stock's move around earnings, while reducing the downside risk.
Dick's Sporting Goods jumped last week on a closer partnership with Nike ( NKE), agreeing to link their brand loyalty memberships. Nike stock moved past a buy point last week as well.
Dick's and Nike shoppers can now connect their Dick's Scorecard and Nike Membership accounts through Dick's mobile app. Customers can shop an expanded selection of Nike footwear and apparel. Among the perks, members will have access to exclusive footwear and apparel launches and collections such as the Nov. 4 Nike Air Force 1 and Blazer launch.
There will also be in-store events for members starting at Dick's House of Sport locations in Rochester, N.Y., and Knoxville, Tenn., in November and December respectively, and expanding to additional Dick's stores over time.
Eli Lilly StockLLY stock is worth watching after it came close to breaking out of a cup-with-handle base, only to reverse lower. The ideal buy point here is 271.21.
The relative strength line for Eli Lilly stock has generally been trending upwards since late September, which is encouraging. It has been lagging while forming its handle however. So far in 2021 the stock has gained more than 54%.
The stock offers investors a stout mix of earnings and stock market performance. This has won the stock a strong Composite Rating of 94 of 99. This puts it in the top 6% of stocks tracked overall.
Institutions have also been getting behind the stock of late, with its an Accumulation/Distribution Rating coming in at a solid B+. This represents moderate to heavy buying among institutional investors.
LLY stock got a big boost after new research into Alzheimer's disease was highlighted. The firm offered two presentations centered on its experimental Alzheimer's drug, donanemab.
One compared the cost-effectiveness of donanemab against Biogen's approved drug, Aduhelm.
And investors will soon get a look at head-to-head data pitting donanemab against Aduhelm in patients with early, symptomatic Alzheimer's disease. Evercore ISI analyst Umer Raffat called the pending study the "holy grail" of drug development.
Both drugs work by targeting the buildup of beta amyloid, an abnormal protein in Alzheimer's brains. Aduhelm gained approval based on this mechanism, but Biogen still has to prove clearing those plaques leads to a benefit on cognition.
Lilly shares enjoyed a run-up earlier this year after Biogen gained FDA approval for Aduhelm. Evercore ISI's Raffat noted donanemab clears beta amyloid faster than Aduhelm. The timing of the study's results could buoy Eli Lilly stock and damage Biogen stock.
"Is Lilly hoping to have an earlier time-point from this (study) to read out shortly into the launch (of donanemab)?" he said. "Possibly." |
